Western sanctions that followed the launching of Russia’s special operation in Ukraine in February were nakedly aimed at reducing Russia energy exports to zero and making the Russian economy “scream,” as they had similarly attempted with Venezuela and Iran. However, with Moscow securing new markets and prices rebounding, it’s Europeans who are on the losing end of things, experts told Sputnik on Thursday.
According to Bloomberg, prices across Europe are expected to increase sharply later this year, when European sanctions against Russian crude oil exports take effect, with some places predicting a doubling in prices. All this while Russia’s crude oil production and income continue to recover to pre-February levels, thanks to expanded exports to Asian buyers and a healthy relationship with OPEC+.
Western European governments had better hope the winter is warm, because if people start freezing due to fuel shortages, they will demand an end to their government’s policies blocking the gas.
Dr. Mamdouh G. Salameh, a visiting professor of energy economics at the ESCP Business School in London, told Sputnik that “energy is far more formidable weapon in the hand of President Putin than hydrogen bombs.”
“The world, particularly the European Union (EU), is very dependent on Russian oil and gas supplies. That is why Western sanctions have so far largely refrained from sanctioning Russian oil and gas exports to the EU and that is why Russia is winning the energy war,” the economist asserted.
“Western sanctions against Russia have on the whole failed miserably,” he said. “The sanctions are hurting the economies of those imposing them rather than the Russian economy.”
He noted that in the US and EU alike, high gas prices are having widespread effects across their economies, helping to push the EU into a recession.
“There will very soon come the time when European citizens will ask their governments to stop spending billions of dollars supplying Ukraine with weapons rather than use these billions to help them reduce their energy bills,” he predicted. “The day is coming when the EU will reverse course on Ukraine and lift the sanctions against Russia in return for plentiful Russian cheap gas and oil supplies. If it is to be able to do that, the EU has to free itself from the United States’ pressure and stand up to the US.”
“The more sanctions Western countries impose on Russia, the higher the prices of oil and gas surge and the more revenues Russia gets from its energy exports,” Salameh said, adding that “Western analysts and some experts are daydreaming and also deluding themselves if they think that the Russian energy sector is failing. They are trying to talk down Russia’s energy sector but they are doomed to fail miserably.”
“The real irony is that Russia’s economy will emerge in a better shape than most Western economies in the aftermath of the Ukraine conflict. Putin is going to have the last laugh.”
Vladimir Demidov, an international expert on the resources and energy markets, told Sputnik that regardless of the path of European policy, at this point, Russian energy is not coming back. European nations will adapt, but the higher energy costs will stay and will cause Europe’s global standing to decline.
“I don't think there's going to be a global crisis, given that [there is] a fairly rapid filling of underground storage facilities,” he said. “I think that talking about freezing is a fiction, of course, provided that -40 [Celsius] does not hold in Europe. And then, I think, it will be more difficult.”
“Next year, I don't think they will freeze at all,” he predicted. “Enough gas for them and mine, I think they will unpack their coal mines, cuts, quarries. There they will start producing gas at home, by fracturing the reservoir, in general, they will kill nature, but they will have enough gas.”
“And in the future, Gazprom will only supply less. I think its share will fall to 50 billion [cubic meters per day] in the next two or three years, at most. The problem is that everything that is mined by them [Europe] is very expensive. The role of Europe as an economically independent unit of the world economy will simply disappear. Europe will cease to be independent,” Demidov said.
Still, Demidov predicted that Europe’s sanctions policies would continue, even as they set in motion the gradual decline of the continent.
“In Europe, four premiers are gone, including in Great Britain. I do not think that it [governments dissolving] will continue; if the winter is really warm enough, then other premiers will not fly. And everyone is fine, they will say that ‘you see, we did it! These hordes have not conquered us!’ After that, the fall of the European economy will start. The sanctions they have introduced have not been thought through, they will cause themselves more damage than Russia in the next 3-5 years.”